BNA’s Health Care Daily Report™ sets the standard for reliable, high-intensity coverage of breaking health care news, covering all major legal, policy, industry, and consumer developments in a...
By Sara Hansard
March 24 — Possible changes to the Affordable Care Act's program for protecting insurers that cover sicker populations were laid out March 24 in a discussion paper issued by the HHS.
Among the ideas covered were how to include high-risk patients in risk adjustment payments made by plans that have healthier enrollees, as well as including prescription drug information in the formula used to calculate the payments. The Centers for Medicare & Medicaid Services is holding a meeting at its headquarters in Baltimore March 31 to discuss changes that would start in 2018.
Small plans, fast-growing issuers, new market entrants and nonprofit CO-OPs created with government funding under the ACA were hard hit in 2014 by big payments they were forced to make under the risk adjustment program, and some of them have asked for payment caps or exemptions for at least the first few years of the program . Blue Cross Blue Shield plans, which generally have benefited from the program, argue that it is necessary to make sure insurers have an incentive to cover people with pre-existing medical conditions.
Under the risk adjustment program, funds are transferred from plans with healthier and lower-cost enrollees to plans with less healthy and high-cost enrollees. All individual and small group plans that took effect after the ACA was enacted in 2010, called nongrandfathered plans, must participate in the program, including those sold outside of the ACA marketplaces.
Of the 468 issuers in the eligible individual market in 2014, 200 issuers, 43 percent, owed charges, while 268 issuers, 57 percent, received payments, the March 24 discussion paper said. It identified three “key themes” for 2014:
The discussion paper said the CMS is “investigating whether the risk adjustment methodology appropriately addresses plan differences.” The transfer equation doesn't address network differences, plan efficiency or effective care coordination or disease management, it said.
“We are exploring a number of ways of addressing such plan differences in our methodology,” including by modifying the risk adjustment equation using a plan’s own premium, the dscussion paper said. That appeared to be a reference to the proposal made by some of the CO-OPs and other plans to cap risk adjustment payments based on a share of their premiums, at least in the initial years of the program. But the CMS said there could be “unintended incentives to raise or lower premiums in order to take advantage of this effect.”
The discussion paper said that “in general, the HHS risk adjustment methodology is working as intended,” supporting market stability by pooling risk and transferring funds from low-risk plans to high-risk plans.
Also on March 24 health-care consulting firm Avalere released a report suggesting changes to the risk adjustment program.
ACA individual marketplace enrollees are older, lower-income and have higher health needs than people in the large group employer market, on which the risk adjustment model was based, Avalere found. Further, 30 percent of ACA marketplace enrollees were enrolled for less than a year and their costs are 18 percent higher than full-year enrollees, Avalere said.
While the CMS uses 127 health conditions to predict the risk of enrollees, only about 19 percent of individuals in the market ended up having one of those conditions, and the risk adjustment program may not be compensating plans for the actual risk of individuals enrolled, Avalere said. The exchange population is different from the Medicare model on which the CMS is basing its risk adjustment model, Tom Kornfield, vice president of Avalere, told Bloomberg BNA March 24.
“They’ve taken some good steps with the prescription drug information they’re talking about including,” Kornfield said. “That’s a positive sign.”
To contact the reporter on this story: Sara Hansard in Washington at email@example.com
To contact the editor responsible for this story: Janey Cohen at firstname.lastname@example.org
The CMS discussion paper is at https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/RA-March-31-White-Paper-032416.pdf.
The agenda for the meeting is at https://www.regtap.info/uploads/onsite/RA_day1_agenda_file.pdf.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)